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Shares of Rambus Inc. (RMBS), a Sunnyvale, California-based technology licensing company, have risen sharply in trading today after the company announced the signing of a patent license agreement with LSI Corporation (LSI) and also raised its revenue outlook for Q1.

Patent License Agreement with LSI

Rambus, which focuses on the development of technologies in the electronics industry, late Tuesday, announced that it entered into a patent license agreement with LSI Corp., a designer, developer and marketer of storage and networking semiconductors. Both companies also settled all pending patent claims against each other. The company did not provide the terms of the patent licensing agreement, which will expire in 2018.

Kevin Donnelly, Senior Vice President and General Manager of the Memory and Interface Division at Rambus, described the license agreement with LSI as a major step for the company as it looks forward to deeper engagement and collaboration with the industry. Donnelly noted that the company is committed to the ongoing development of superior technologies that bring value to its customers as it helps bring innovative technologies and products to market.

Rambus had filed a lawsuit against LSI back in 2010 over some of its patents. The lawsuit was one of the several Rambus had filed that year against a number of companies, including Broadcom Corporation (BRCM). The lawsuit against Broadcom was settled in 2011. Both companies also signed a five-year patent license agreement back then.

Back in September last year, Rambus had signed a six-year patent license agreement with Fujitsu Semiconductor Limited. The agreement covered the use of Rambus' patented innovations implemented in a broad range of integrated circuit (IC) products offered by Fujitsu Semiconductor.

Raises Revenue Outlook

While Rambus did not disclose the financial terms of the patent license agreement with LSI Corp., the company did raise its revenue outlook for the first quarter.

For the first quarter ending March 31, 2013, the company expects revenue to be between $65 million and $69 million, which is above the previous guidance range of $58 million to $63 million.

Rambus is scheduled to release its quarterly results for the first quarter on April 19th, 2013.

Last month, the company had reported its financial results for the fourth quarter ended December 31, 2012. The company's revenue for the fourth quarter of 2012 was $57.4 million, flat on a sequential basis. Revenue for the full year ended December 31, 2012 stood at $234.1 million, down 25% over 2011. The company had posted a net loss of $16.1 million for the fourth quarter of 2012, down from $58.1 million reported in the previous quarter, and $28.7 million reported in the same period in the previous year. Net loss for the full year 2012 was $134.3 million.

Shares Surge on Revenue Outlook

Rambus shares have risen sharply in today following the upward revision to first-quarter revenue guidance and the patent license agreement.

At last check, RMBS shares were trading nearly 3% higher at $6.01. Earlier in the day, the stock hit an intra-day high of $6.27.

Rambus shares have excellent run this year. Year-to-date, the stock has gained more than 23%, making it one of the best performers in Technology sector.

Should You Buy Rambus?

Rambus' shares solid performance this year can be attributed to the steps taken by the company to position itself for growth. The patent license agreement with LSI Corp. has given the stock a further boost.

In a conference call last month, Rambus' CEO, Ron Black said that the company is expanding its focus to mobile, which it believes will ultimately be the largest opportunity for its security technology. Black noted that smartphones increasingly contain sensitive information for consumers and enterprises and are slowly becoming payment terminals. Given the fact that smartphone market is expected to grow at a robust pace over the next few years, mobile offers a huge opportunity for Rambus.

At the CES in Las Vegas, Nevada, last month, Rambus had launched Imerz, a multi-media platform enabling users to access video in a personalized experience.

Rambus has also launched new LED light bulbs. This could be another key revenue driver for the company, given the expected growth in LED lighting market.

In August last year, the company had announced restructuring and related cost saving measures. The company expects to save around $30-$35 million annually as a result of these measures.

The big question is should you buy Rambus? Based on the recent developments, the company's increasing focus on mobile and cost-cutting measures, Rambus looks like a good opportunity and I'm looking to buy in the coming weeks.

Source: Rambus Shares Rally, Here's What You Need To Know